Insurance And Tax Fraud: A Trucking Co. Owner’s Jail Time
Anthony Mr. Catalano, 52, the former owner of a Massachusetts-based trucking and delivery company, APC, was sentenced on January 16th to serve six months in prison, followed by three years of supervised relief for a complex fraud scheme involving millions of dollars in unreported income, unpaid taxes, and workers’ compensation insurance premium fraud by use of the mails (“mail fraud”).
Mr. Catalano pleaded guilty last October to two counts of failing to pay employment taxes and one count of mail fraud related to workers’ compensation insurance premium fraud.
Paying employees “under the table” and hiding employee compensation from insurer
Mr. Catalano’s company brought in over $12 million from customers between 2017 and 2020, but he deposited only $4 million, hiding the other $8 million in cashed checks. He evaded corporate and personal income taxes by not reporting this income. Mr. Catalano also used over $5 million of the unreported cash to pay employees “under the table” and did not pay the IRS over $1 million in owed employment taxes.
Additionally, Mr. Catalano defrauded his workers’ compensation insurance provider, Travelers Insurance, out of $541,000 in premiums by fraudulently reporting false employee payroll information on premium audits. The U.S. Attorney’s sentencing memorandum noted that the premium fraud would have been larger except for Mr. Catalano illegally allowing APC to operate for an entire year without workers’ compensation coverage, putting employees at risk.
Health issues and recidivism risk disputed
In his sentencing memorandum, Mr. Catalano asked for probation rather than imprisonment due to severe health issues, including heart failure, cirrhosis, and gastrointestinal bleeding, stating that a prison term could put his life at risk. The prosecution contested this claim, providing a letter from the Bureau of Prisons Medical Director stating that the BOP has adequate resources to treat Mr. Catalano’s conditions.
Mr. Catalano’s attorney argued on his client’s recidivism risk, “There is no chance he would commit the same crime again.” But the prosecution disagreed, stating that Mr. Catalano’s “personal and criminal history hardly assured that if he obtained employment or had windfall income, he would not conceal personal income as he did when he failed to report millions of dollars of income in this case.”
In a footnote to its sentencing memorandum, the prosecution noted that “Mr. Catalano had a significant criminal record before he commenced the current tax and mail fraud offenses.”
Prosecution seeks a year and a day’s imprisonment and $1.5 million in restitution
The federal sentencing guidelines called for a range of 33-41 months incarceration based on Mr. Catalano’s total offense level and criminal history. However, the prosecution requested a below-guideline sentence of “one year and one day” to reflect mitigating factors while imposing “significant” consequences for the criminal conduct.
The prosecution argued that their requested sentence “serves the purposes of consideration of the gravity of the offenses, the defendant’s individual and offense characteristics, personal and societal deterrence, protection of the public and promotion of respect for the law.”
In addition to the prison term, the prosecution asked for 36 months supervised release and $1.09 million restitution to the IRS, and $541,000 restitution to Travelers Insurance.
The Court deviates further downward from the sentencing guidelines but still orders incarceration
The Court, however, deviated further downward on the sentencing guidelines and elected to sentence Mr. Catalano to 6 months incarceration instead of the prosecution-requested year and a day. The Court did impose 3 years of supervised release following Mr. Catano’s release from prison. The Court ordered restitution to Travelers Insurance totaling $540,968.. Mr. Catalano was also ordered to cooperate with the Internal Revenue Service regarding his personal and corporate taxes due and owing.
Though below sentencing guidelines, the sentence confirmed that fraud schemes involving substantial unreported income and fraudulently suppressed insurance premiums warrant meaningful prison time along with restitution orders.
The Court ordered Mr. Catalano to report to an institution designated by the Bureau of Prisons to begin serving his jail sentence on February 27, 2024.
The U.S. Attorney’s Office and the IFB’s prosecution team
Acting United States Attorney Joshua S. Levy and Harry Chavis, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, Boston made the announcement of Mr. Catalano’s sentencing. They acknowledged the assistance provided by the Massachusetts Insurance Fraud Bureau. Assistant U.S. Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit prosecuted the case against Mr. Catalano.
